Congress Must Responsibly Raise the Debt Limit
Today, the Treasury Department announced that it has begun engaging in a set of accounting tools known as “extraordinary measures” to avoid breaching the nation’s $31.38 trillion statutory debt limit. Those measures are expected to delay that breach until at least early June and possibly later.
The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
Without qualification, the debt limit must be increased or suspended, and it should be done so as quickly as possible. Ideally, we would return to the practice of lifting the debt ceiling without relying on extraordinary measures – which have become all too ordinary – and refrain from making the increase anything close to a last-minute showdown.
The debt ceiling is too important to turn into a game of chicken, and default should never be suggested by those with a fiduciary responsibility to govern the nation. Politicians who are rightly worried about the nation’s unsustainable borrowing path should take a hard stance against new borrowing and oppose legislation that would add to the debt while offering specific solutions to control the debt already on the books, rather than threatening not to pay the bills on borrowing that has already been incurred.
The debt ceiling does offer the opportunity for all lawmakers to pause, assess the fiscal situation of the nation, and take action as necessary. And it is necessary. The debt as a share of GDP is at near record levels. We are on track to begin adding $2 trillion per year to the debt by the end of the decade. Interest payments are the fastest growing part of the budget and are projected to start costing $1 trillion annually in only a few years. The Social Security and Medicare Hospital Insurance trust funds are headed toward insolvency. And last year alone, Congress and the President passed bipartisan legislation that added nearly $2 trillion to the projected national debt. This is an urgent problem that is not getting the attention it needs.
An ideal solution would be for Congress to lift the debt ceiling as soon as possible and at the same time put in place measures to improve our fiscal trajectory. This could include specific policies or processes such as a fiscal commission.
Attaching fiscal reforms to the debt limit was common practice in the past when both policies and processes to improve fiscal responsibility were included as part of a deal. More recently, in a jaw-dropping act of fiscal irresponsibility, politicians in both parties pivoted to support debt ceiling increases along with legislation that made the debt worse. Under President Trump, the debt ceiling was lifted three times with bipartisan support and included legislation that added in total a stunning $2.1 trillion in new borrowing to the debt.
Congress should return to the past model of a debt ceiling increase, legislation to improve the fiscal situation, and a broad based understanding that the debt ceiling must be increased in a calm and timely manner. We must not threaten default. The cost is simply too high.
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